Has beauty been the ‘missing link’ for Kohl’s business?
Image: Kohl’s

Has beauty been the ‘missing link’ for Kohl’s business?

Kohl’s has fast-forwarded by a couple of years putting beauty departments in all of its stores after the chain’s management found the category was driving incremental business in stores that had been treading water in recent years.

On the chain’s recent second quarter earnings call, CFO Wesley McDonald told analysts that stores with beauty departments in place have been seeing category comp increases in the 30 percent range. He said the departments were “a big success” and “we’re very happy about it” before mentioning that Kohl’s was working on bringing in new brands to give consumers even more reasons to shop its stores and kohls.com.

Michelle Gass, Kohl’s chief merchandising and customer officer, is spearheading the beauty effort for the chain. She told Maria Halkias of The Dallas Morning News, that beauty was “a missing link” for the department store’s business. During the rollout, stores with beauty departments achieved comp increases ahead of those locations without them.

In addition to bringing in luxury brands consumers want, Kohl’s is investing in training associates. The chain brought 1,200 people from its stores to Texas to attend classes put on by beauty vendors, according to the same Dallas Morning News report.

Ms. Gass said she doesn’t see beauty departments as a standalone effort, but part of the chain’s broader health and fitness push going back to 2014.

“A customer seeking a healthy life as a trend isn’t going to change,” she told the paper. “And it comes full circle back to beauty and leading a fulfilled life.”

Kohl’s recently announced a deal with Under Armour to sell its active apparel and footwear beginning next year. At the time the deal was announced, Ms. Gass described it as building “on other notable investments we’ve already made in our Active business. We believe Kohl’s is uniquely positioned to celebrate the athletes and wellness enthusiasts in every family.”

BrainTrust

"No surprise that it’s working, just as Sephora has been driving sales at J.C. Penney for several years."

Dick Seesel

Principal, Retailing In Focus LLC


"It’s very smart of Kohl’s to recognize the value of beauty as a category, though this is not a newsflash..."

Phil Rubin

Founder, Grey Space Matters


"I believe the category needs to start eating its own children and show a willingness to cannibalize itself in the quest to reinvent and re-brand."

Tom Dougherty

President and CEO, Stealing Share


Discussion Questions

DISCUSSION QUESTIONS: Do you see beauty departments as offering Kohl’s a longer-term opportunity to drive incremental sales? How should the chain position the department from merchandising and marketing perspectives to incorporate it into its larger health and fitness strategy?

Poll

4 Comments
Oldest
Newest Most Voted
Inline Feedbacks
View all comments
Dick Seesel
Trusted Member
7 years ago

In the interest of historical accuracy, Kohl’s has carried beauty in all stores since 2004-2005, when the company introduced exclusive brands developed by Estée Lauder. (I was involved in the launch.) The difference now appears to be the greater variety of brands, increased staffing and the much bigger footprint being rolled out for the category.

No surprise that it’s working, just as Sephora has been driving sales at J.C. Penney for several years.

Larry Negrich
7 years ago

From an observational-only analysis during a recent visit to the Kohl’s Scottsdale store, their shopper skews overwhelmingly towards female. Expanding beauty offerings seems like a natural way to grow business, encourage longer visits and appeal, depending on the selection, to a younger shopper — the future shopper. Better than adding coffee.

Phil Rubin
Member
7 years ago

It’s very smart of Kohl’s to recognize the value of beauty as a category, though this is not a newsflash to other more traditional department stores like Macy’s and Nordstrom. Now more than ever, beauty as a category is a traffic driver, a frequency play and an “affordable indulgence” as much as it is a reflection on consumers seeking wellness, at least in terms of aging and appearance. It’s recession-proof as even in tough times beauty is steadfast and often a contra-indicator (the “Lipstick Index”).

Tom Dougherty
Tom Dougherty
Member
7 years ago

Incremental sales in department store sales are lipstick on a pig. The entire meaning of what a department store IS and the brand’s reflection of that meaning is where real answers will be found.

I believe the category needs to start eating its own children and show a willingness to cannibalize itself in the quest to reinvent and re-brand. Adding departments in department store retail is akin to Burger King trying to “menu” its way out of the fast food doldrums.

The market has changed and the department store retailers are still trying to hold onto the ghost of past successes. No-one has figured it out yet because the sacrifices to become relevant again seem to be extreme. But the wall is fast approaching. Declining sales, lower margins and fewer customers will force the hand of these old giants.

The secret sauce will be found by digging into the precepts of the emerging target audience and aligning the brand and operations with that belief set. The prospect NEEDS to look at the brand and feel a sense of incompleteness without it. Kohl’s needs re-branding, not new departments. It needs to slay sacred cows and be willing to move on. The first department store to recognize this inevitability will win. The others will lose.